• the key to successful trading

the key to successful trading

I see so many self-proclaimed trading philosophers on Twitter constantly spouting off fancy trading quotes and cliches. Here’s one I saw on Twitter this week, and it just about made me vomit: 

“What separates successful technicians from not so successful? No matter the chart style, it comes down to the analysis of price action.”

Sounds brilliant. 

Feels right. 

Touches the soul. 

But…

It is a crock of crap!!! (I added a couple of extra exclamation points just for further emphasis.)

You got others out there that will say,

“Buy low, sell high.”

“Buy the rumor, sell the news.”

“Buy the %*#@%^#! dip”

“Sell in May, Go Away”. 

Blah, blah, blah!
 
If you really want to know the two things that successful trading boils down to, it isn’t smarts, it isn’t trading systems, it isn’t price action or technical analysis. Those are all helpful tools to have at your disposal, but they have nothing to do with what is at the root of success. 
 
What is at the root of success is the ability to manage risk, and to manage yourself. If you don’t do both of these things, nothing else will ever matter. So when the guy full of hot air says it all comes down to “price action”. He apparently has never examined himself as a trader beyond the ability to look at a chart. 
 
I use charts every day, I scan hundreds if not thousands of them every single day. And yet the ability to trade successfully doesn’t come down to how many alerts go off on my trading platform, or how many good setups I can find.
 
NO! Far from it, it comes down to the ability to manage the risk on each and every trade. To follow the steps that I have put in place to keep price action from getting out of control, and in the process to control myself, from not violating my risk principals, to not trade out of frustration and boredom, or to take on a trade where I cannot define the risk. 
 
That is what IT ALL COMES DOWN TO!!! Sorry for the caps, but when you are typing this stuff out, there is only so much emphasis that you can put on the written word (and I think I just used everything I had at my disposal besides some lame emoji). 
 
So yes, manage yourself, mange the risk, and guess what? The profits will come. I promise the profits will come. But you have to believe that your biggest enemy to success in trading is yourself, and the unwillingness of traders to not respect the risk. 
 
MANAGE RISK, MANAGE YOURSELF!
 
That is what trading boils down to. 
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